1998 Minnesota Statutes

     268.065 Liability of third parties to assure payment of 
  amounts due from contractors, subcontractors, and employee 
  leasing firms. 

    Subdivision 1.    Contractors.  A contractor, who is or 
 becomes an employer under this chapter, who contracts with any 
 subcontractor, who is or becomes an employer under this chapter, 
 shall guarantee the payment of all the taxes, interest, 
 penalties, and collection costs which are due or become due from 
 the subcontractor with respect to wages paid for employment on 
 the contract by: 

    (a) withholding sufficient money on the contract; or 

    (b) requiring the subcontractor to provide a good and 
 sufficient bond guaranteeing the payment of all taxes, interest, 
 penalties, and collection costs which may become due.  

    The contractor may make a written request for verification 
 that the subcontractor has paid the taxes due 60 days after the 
 due date for filing the tax report that includes the final wages 
 paid for services performed under the contract.  If department 
 records show that the subcontractor has paid the taxes for the 
 period covered by the contract, the department may release the 
 contractor from its liability under this subdivision. 

    The words "contractor" and "subcontractor" include 
 individuals, partnerships, firms, or corporations, or other 
 association of persons engaged in the construction industry. 

    Subd. 2.    Employee leasing firms.  A person whose work 
 force consists of 50 percent or more of workers provided by 
 employee leasing firms, is directly liable for the payment of 
 all the taxes, penalties, interest, and collection costs which 
 are due or become due from wages paid for employment on the 
 contract, unless the contract requires the employee leasing firm 
 to provide a good and sufficient bond guaranteeing the payment 
 of all taxes, penalties, interest, and collection costs which 
 may become due.  "Employee leasing firm" means an employer that 
 provides its employees to other firms, persons, and employers 
 without severing its employer-employee relationship with the 
 worker for the services performed for the lessee. 

    Subd. 3.    Determination of liability.  An official 
 designated by the commissioner shall make an initial 
 determination as to the liability under this section.  The 
 determination shall be final unless the contractor or person 
 found to be liable files a written appeal within 30 days after 
 mailing of notice of determination to the person's last known 
 address.  Proceedings on the appeal shall be conducted in 
 accordance with section 268.105. 

    HIST: 1987 c 385 s 36; 1989 c 65 s 14; 1995 c 54 s 19; 1997 C 
 66 S 79,80; 1998 c 265 s 44